Technical analysis is a controversial topic, merely higher lows are commonly interpreted as a sign of forcefulness. On Sept. 28, Ether (ETH) might be xxx% below its May 12 high of $4,380, but the current $3,050 price is 78% higher than the half-dozen-month depression of $1,700. To understand whether this is a "glass half full" situation, ane must analyze how retail and pro traders are positioned according to derivatives markets.

Ether toll on Coinbase in USD. Source: TradingView

On Sept. 24, Chinese authorities announced new measures to curb crypto adoption, causing the 2nd-largest Ethereum mining pool (Sparkpool) to suspend operations on Sept. 27. Co-ordinate to Sparkpool, the measures are intended to ensure the condom of users' assets in response to "regulatory policy requirements."

Binance as well appear that it would halt fiat deposits and spot crypto trading for Singapore-based users in accordance with local regulatory requests. Huobi, another leading derivatives and spot exchange in Asia, likewise announced that it would retire existing Mainland Red china-based user accounts past twelvemonth-end.

Pro traders are neutral, but fear is starting to settle in

To assess whether professional traders are leaning bullish, ane should beginning past analyzing the futures premium — likewise known every bit the ground charge per unit. This indicator measures the price gap between futures contract prices and the regular spot market place.

Ether quarterly futures are the preferred instruments of whales and arbitrage desks. Although it might seem complicated for retail traders due to their settlement appointment and price difference from spot markets, their most significant advantage is the lack of a fluctuating funding rate.

Ether three-month futures basis rate. Source: Laevitas

The three-month futures ordinarily trade with a 5% to 15% annualized premium, comparable to the stablecoin lending rate. By postponing settlement, sellers need a higher price, causing the toll deviation.

Every bit depicted above, Ether'south dip beneath $2,800 on Sept. 26 caused the basis rate to test the five% threshold.

Retail traders commonly opt for perpetual contracts (inverse swaps), where a fee is charged every viii hours depending on which side demands more leverage. Thus, to sympathize if longs are panicking due to the recent newsflow, one must analyze the futures markets' funding rate.

Ether perpetual futures 8-hour funding charge per unit. Source: Bybt

In neutral markets, the funding rate tends to vary from 0% to 0.03% on the positive side. This number is equivalent to 0.half-dozen% per week and indicates that longs are the ones paying it.

Between Sept. 1 and 7, a moderate spike in the funding rate took place, merely it dissipated as a sudden crypto crash caused $3.54 billion worth of futurity contracts liquidations. Apart from some short-lived, slightly negative periods, the indicator has held flat always since.

Both professional traders and retail investors seem unaffected by the recent $2,800 support beingness tested. Notwithstanding, the situation could quickly revert, and "fright" could emerge if Ether falls beneath such a toll level, which has been belongings strong for 52 days.

The views and opinions expressed here are solely those of the writer and do not necessarily reverberate the views of Cointelegraph. Every investment and trading motility involves risk. You should deport your own enquiry when making a decision.